(Reuters) — Bank of America Corp's <BAC.N> financial crisis hangover
is lasting longer than expected, leading some investors to wonder if
the massive litigation expenses being incurred have become a
recurring cost of doing business instead of being dismissed as
one-time items.

The bank on Wednesday posted $6 billion of litigation costs for its
first quarter, far exceeding the $3.7 billion of settlement costs
that investors had previously known about.

Since the 2008-2009 financial crisis, Bank of America has announced
some $50 billion of settlements, before taxes. Without those
charges, its income before taxes would have been about three times
higher.

It has posted more than $1 billion of expenses from announced and
expected settlements, excluding its lawyer fees, in eight of the
last seventeen quarters, and in some quarters many times that
number. Litigation expenses in four of the five quarters since the
start of 2013 have exceeded $1 billion.

"It's almost like these guys have become the tobacco industry," said
Matt McCormick, a portfolio manager at Bahl & Gaynor Investment
Counsel, in reference to payments by cigarette makers to settle
lawsuits. "It becomes a constant irritant, these things just don't
seem to go away," McCormick added. Bahl & Gaynor, which manages more
than $11 billion, does not invest in Bank of America shares.

Bank of America declined to estimate on Wednesday how much
additional settlement costs may total beyond what it has already set
aside.

The expenses stem mainly from mortgages that Countrywide Financial
Corp made during the housing boom and sold to investors. Bank of
America bought Countrywide in July 2008, just as the mortgage
collapse was triggering the crisis.

Bank of America has resolved most of the outstanding litigation with
investors, including most of their demands that the bank buy back
bad mortgage bonds. The bank is now focusing on settlements with the
U.S. Department of Justice and other enforcement agencies.

On a conference call on Wednesday, analysts pressed Bank of
America's Chief Financial Officer Bruce Thompson to indicate when
the bank will stop piling up big litigation costs.

Thompson said the bank has worked through many of its outstanding
issues, but he added, "I think we need to be realistic ... it is
very hard to predict."

His response was more subdued than in October 2013, when he said on
a conference call with investors: "I think at this point relative to
our peers we have tried to be out front and get through some of the
larger settlements that we have."

The pain may continue longer than investors had hoped, but Bank of
America's legal expenses will at some point start to subside as it
works through the crisis-era matters still in litigation.

"Eventually it's going to be over. It's almost like a bad loan
you're writing off" that will bottom out some day, said David
Ellison, a portfolio manager at Hennessy Funds, which holds Bank of
America shares.

Legal expenses have been an issue for all Wall Street banks since
the financial crisis, but Bank of America has been hit particularly
hard.

In December 2013, research firm SNL Financial tallied total credit
crisis and mortgage-linked settlements for the biggest U.S.
commercial and investment banks. Bank of America had generated more
than half of the total. JPMorgan Chase & Co, <JPM.N> the next
biggest on the list, was responsible for about 30 percent.

Higher legal bills have undermined the cost-cutting initiatives
introduced by Chief Executive Brian Moynihan. Through the bank's
Project New BAC program, it achieved $1.5 billion of quarterly cost
savings by the end of 2013. But litigation expenses that year
averaged $1.5 billion per quarter.

There had been signs the bank had been making progress in putting
many of its legal troubles to bed at the start of 2014. In January,
the bank received a New York judge's approval for a $8.5 billion
settlement with investors over soured mortgage securities. The
bank's $9.3 billion settlement with the Federal Housing Finance
Agency in March resolved 88 percent of its total exposure to the
mortgage bonds over which it had faced litigation.

Still, some money managers are getting impatient.

"When does it end? And how do you factor that into the way you value
the company?" said Ken Crawford, portfolio manager for Argent
Capital Management in St. Louis. Argent does not own Bank of America
shares.

Investors traditionally try to value a company based on the earnings
of its continuing businesses, and often ignore expenses that are
seen as one-time or historical. For a long time, investors viewed
mortgage-crisis costs as falling into the "historical" category.

That may be changing for Bank of America and perhaps even other
banks, said Bahl & Gaynor's McCormick.

Bank of America brought much of this pain on itself, when it bought
Countrywide in 2008. Brian Moynihan, who became the bank's chief
executive more than a year after the deal closed, said in 2011,
"Obviously there aren't many days when I wake up and think
positively about the Countrywide acquisition."